Without a doubt, the beginning of 2022 has been volatile for cryptocurrencies. It seems as if all tokens are moving several percentage points daily, and no one knows if there is an end in sight. One such token caught in this volatility is Solana, a blockchain that focuses on decentralized finance (DeFi) applications through low costs and high speeds. While Solana has fallen significantly in the past year, Benzinga takes a look at what the future may hold for the project.
Can Solana (SOL) Drop Lower Than $20?
One price point that many are eyeing for Solana is $20. The token is currently trading around $30, so this is a considerable drop. However, when you examine current price trends, this price may not be out of the question.
Towards the end of 2021, SOL hit an all-time high of over $250. Since then, it has fallen to its current price levels.
A couple of events may determine if SOL can drop lower than $20. The first is the future of the crypto markets. If they continue to fall, then SOL could get dragged along and drop below $20. Conversely, the markets could rally, and the price could begin moving away from $20.
Another event that plays importance in the future of Solana is the ETH Merge. The merge could bring back demand for DeFi. This move could either work in favor for SOL by bringing back users and demand for SOL or attract users to ETH and detract from the need for Solana.
Either way, the future price of SOL is largely dependent on overall market conditions as well as future news from its competitors.
Why is Solana (SOL) Going Down?
SOL’s price drops could be attributed to multiple happenings in the crypto space. First, the overall crypto markets have suffered. Solana could be caught up in this and gone down with most other cryptocurrencies.
Additionally, the demand for DeFi has dropped considerably in recent months. Since Solana is an answer to slow transactions speeds from high demand, it has lost a significant amount of activity on the chain. With less activity, there is less demand for the SOL token, thus bringing the price down.
How to Short Solana (SOL)
If you are bearish on Solana, then you may have considered shorting the token. Fortunately, there are multiple ways to do so.
The first option is the most straightforward and is through the crypto exchange ByBit. This exchange offers inverse perpetual derivative contracts, which are a way to short a token using the token itself as collateral.
The other way to short Solana is a more traditional way of shorting. This process involves borrowing the token and instantly selling it. Then if the price falls, you can buy back the tokens and return them to the lender for a profit. This is a much risker form of shorting.
Can Solana (SOL) Still hit $100 in 2022?
Another major price point for Solana is $100. While this is a far cry from its previous highs of over $250, it is still over three times the current price.
For Solana to hit $100, the markets would have to rally pretty heavily. The last time the price was at $100 was in April 2022. The markets have fallen considerably since then, so a turnaround would require a lot of support.
Additionally, institutional investors have shown a strong preference for SOL in the past year. If institutional investment floods the crypto scene, then SOL could see price hikes much faster than other tokens.
Where to Buy Solana (SOL)
Solana has grown in popularity since its release in 2020 and has made its way up to number nine out of all cryptocurrencies in terms of market cap. Because of this, the token is available on a variety of crypto trading platforms.
Among the best platforms that the token is offered on include Coinbase Global Inc. (NASDAQ: COIN), Robinhood Markets Inc. (NASDAQ: HOOD), FTX and Gemini. These platforms are well known for their low fees, ease of use and security.
Will Solana (SOL) Keep Crashing?
Solana has had a tough run in 2022, and no one knows where the price may go. However, it is possible to take a look at factors that may impact Solana’s price and come up with inferences.
If you are interested in trying to predict where Solana may go, it could be a good idea to take a look at the general market consensus, new plans for the Solana chain and the amount of activity in the DeFi space.
Is Now a Good Time to buy Solana (SOL)?
While it is nearly impossible to determine if now is a good time to buy Solana, you can use a couple of strategies to limit losses.
Dollar cost averaging is a great way to limit losses for long-term investors. This strategy involves buying the same amount of a token at a set interval. For example, yoy could buy two SOL once a month.
Another strategy is setting stop losses. This action automatically triggers a sell order if SOL falls to a certain price. Doing this can take the emotion out of investing and help investors create solid plans for their investments.